PRECIOUS-Gold hits two-week high after latest Trump tariff threat

* Spot gold up 1.2% this month
* Platinum heads for biggest monthly loss since 2015
* Silver on track for fourth straight monthly loss

(Updates prices)
By Brijesh Patel
May 31 (Reuters) - Gold scaled a more than two-week peak on
Friday and heading for its first monthly gain in four after
Washington's threat of tariffs on Mexico exacerbated fears of a
global economic downturn, driving investors to perceived safe
havens.
Spot gold XAU= jumped 0.8% to $1,298.71 an ounce by 1218
GMT, having hit its highest since May 15 at $1,299.21.
Bullion has risen by about 1.2% this month and is also on
track for a second consecutive weekly gain, advancing by about
1%.
U.S. gold futures GCcv1 rose 0.9% to $1,298.10.
"The extension of trade tariffs from being (only a)
Sino-U.S. issue caught people by surprise," said Ross Norman,
chief executive at Sharps Pixley.
"Suspect this new development with Mexico indicates that
this is not just an issue across the Pacific but could extend
to the extent that global economic growth could be dented even
further."
U.S. President Donald Trump on Thursday said that Washington
will impose a 5% tariff on all goods coming from Mexico,
starting on June 10, until the flow of illegal immigrants into
the United States ceases. Financial markets were rattled by the possibility that the
United States and beyond could be tipped into recession.
MKTS/GLOB
Meanwhile, expectations of a cut in interest rates by the
U.S. Federal Reserve increased after recent weak economic
readings from the United States added to concerns raised by the
prolonged U.S.-China trade dispute. "The market is now factoring in three Fed rate cuts
totalling 75 basis points by the end of 2020," Commerzbank
analysts wrote in a note.
Lower interest rates would support gold because they reduce
the opportunity cost of holding non-yielding bullion.
"However ... Gold hasn't done better because the dollar is
considerably up year to date," said Sharps Pixley's Norman.
The dollar index .DXY is on track for a weekly gain and
has risen about 2% this year on its status as a safe-haven asset
in times of market and economic turbulence. USD/
Among other metals, silver XAG= edged 0.1% higher to
$14.52 an ounce but looked poised to register for a fourth
consecutive monthly loss.
Platinum XPT= was little changed at $791.16, on track for
its biggest monthly loss since November 2015, down about 10.5%.
Palladium XPD= fell 0.2% to $1,364.95. Prices were up more
than 2% for the week.